NIGERIA: Nigerian president Umaru Yar'Adua blocks central bank plan to re-denominate the Naira currency

Record ID: 234690

  • Title: NIGERIA: Nigerian president Umaru Yar'Adua blocks central bank plan to re-denominate the Naira currency
  • Date: 29th August 2007
  • Summary: (AD1) LAGOS, NIGERIA (AUGUST 27, 2007) (REUTERS) PEOPLE READING NEWSPAPERS AT A NEWS STAND
  • Embargoed: 13th September 2007 13:00
  • Keywords:
  • Location: Nigeria
  • Country: Nigeria
  • Topics: Economic News,Domestic Politics
  • Reuters ID: LVADN8JFSOAXKWGSVCFO6YD0WQM8
  • Story Text: Many Nigerians are not happy about the suspension of the strategic Naira policy recently announced by the Central Bank of Nigeria (CBN).
    President Umaru Yar'Adua was not convinced by a central bank plan to re-denominate the Naira currency and rebuked the governor for announcing it without his approval.
    CBN Governor Chukwuma Soludo announced on August 14, the plan to remove two zeros from the currency starting from August 1, 2008 as part of four major policy changes.
    It was not clear whether the other measures, some of which financial markets consider more significant, were also being suspended.
    Yar'Adua's statement confirmed that the re-denomination was being scrapped after Justice Minister Michael Aondoakaa announced on Friday (August 24) that he was freezing the plan over a legal issue.
    "All actions of the Central Bank in respect of re-denomination of the Naira must be in accordance with section 19 of the Central Bank Act,"
    Aondoakaa told journalists. "He (Soludo) must seek the approval of the president first and obtain the approval of the president in writing. Until such approval is obtained in writing no further action on Naira re-denomination."
    Reacting to the suspension of the strategic Naira policy, some Nigerians said they were not happy with the government's decision, saying it would have helped in checking corruption.
    "I feel that the federal government is threatened by this re-denomination. That is why they are accusing Soludo of not following the right channels," said Patrick Amadama, a Lagos resident. He added: "The fear of most people in government is that they have stashed a lot of money, they have hidden a lot of money so they don't want any adjustment to be made to the Naira so that they can retain their old currency, because if they are to bring those old money to change to the new currency that is when a lot of them will be caught for money laundering and all sorts of fraud associated with Naira manipulations."
    Others felt that the government should consult widely and study the policy rather than scrap it out completely.
    "If the suspension is temporary as in the sense that they are thinking about it and studying it some more fine, but if it's an outright thing just because they are upset, because somebody didn't discuss properly with them, I think it's not the right attitude for a serious nation,"
    said Bola Fadawusi, another Lagos resident.
    The re-denomination, a cosmetic change which would not in itself have affected the real value of the Naira, came just months after the central bank introduced new 50, 20, 10 and 5 Naira notes. These notes, which cost millions of dollars to print, would have become useless after the re-denomination.
    The president's statement is a blow to Soludo. It comes after Yar'Adua named an Economic Management Team that does not include the central bank governor. Soludo had been a member of the economic team under former president Olusegun Obasanjo. Soludo's exclusion from the new team has fuelled press speculation that he will soon be forced out of his position.
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